good morning, everybody, welcome to squawk box here on cnbc. i'm becky quick with andrew ross sorkin and brian sullivan. elon mosque is taking average peel to space but forget about rockets. check out these pictures. could a trip out of this world be as simple as an elevator ride? i don't know doesn't sound like a simple elevator ride to me but we'll tell you a lot about one company's idea for a free standing tower that can give you a boost. that's coming up later this hour. first the market news of the morning. check out the u.s. equity futures this morning. been under a little pressure today. the dow futures are lower. down by 48 points below fair value. s&p down by 5.5. the nasdaq down by close to 10. on the agenda a key piece of

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data on inflation. also minutes from the last fomc meeting. the july consumer price index will be released at 8:30 eastern time and at 2:00 this afternoon we should be getting more insight into what fed policy makers talked about last month and perhaps what they're thinking about is the highly anticipated september gathering. >> here's the other stories we're watching today. china's wild and scary ride continuing, volatile perhaps not a strong enough word to describe the session. the shanghai composite dropped by 5% early on but then closed up by more than a percent. they point to government backed buyers as catalysts for the turn around as well as rumors that china's central bank might be ready to cut the key reserve ratio requirements for banks. german lawmakers are voting on a greek bailout. the legislation is expected to pass despite a growing rebellion within chancellor merkels on party. more from our colleagues in europe in a few minutes. back here in the states the

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consumer remains front and center among the companies set to post their earnings today, target. that retailer up about 4% so far this year but down over 4% over the past month. >> let's talk about stocks to watch today. yum brands announcing new leadership for its china division. the company veteran is being named ceo of the group. this comes as activists lobby for yum to spin off china business. also take a look at analog devices. it looks to be a winner as well. shares of the electronic parts maker get a boost after better than expected quarterly results and upbeat guidance. that's up by more than 7%. canadian solar coming under pressure. beating the street with the latest results but the company is issuing weak revenue guidance and the chinese social media company weibo topping expectations on the top and bottom line. >> we got a little drug news this morning. i don't know why i have to talk about this this morning but news from a drug maker, private company, getting a lot of buzz

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this morning. the fda approving the first drug to treat low sexual desire in women but there's a warning about potentially dangerous low blood pressure and fainting side effects and here's the important part, especially if there's alcohol involved. so there's a joke to be had here but it's too early in the morning. the drug is made by sprout pharmaceuticals. regulators say the drug will only be available to certified and specially trained health care professionals and pharmacies due to safety issues. >> we are seeing futures not indicating a big change. we are down a little bit. implied open is down 5.17-on-the s&p 500. about a 45 point drop indicated for the dow but it's very early. . a similar story there. we're town by some but not too

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much. we referenced the wild ride in asia overnight. that does not tell the story. that market was down more than 5% before turning around the hang seng and the japan nikkei both down more than 1%. oil has been the big story the last couple of months and crude oil indicating down this morning 19 cents. 42, 43 in a very thin trade. the 10 year treasury note. some say it's going to end the year below %. we're marching that way. 2.84% right now. if you're concerned about the euro-dollar trade at 11041 on the euro dollar. that could impact the precious metals. let's check the gold trade right now. this morning we're seeing the precious metal trading up 5 bucks an ounce. 1122 per ounce. >> let's take a look at earnings from lowe's. coming in 4 cents below estimates. taking a look at what's happening with this. they do see quarterly profit of

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$1.20 a share. revenue just above forecast. if you're looking at store sales, they're up by 4.3% from a year ago. it's interesting after what we heard yesterday when they came in with good news looking at their guidance. if you look at lowe's they're looking at earns per share of $3.29. they'll be thinking that they'll be making up in the third and fourth quarters for the current short fall in this current quarter. look at that stock, it's down by 53 cents but again they're talking about for the full year being just above expectations and that may sooth some of the concerns that you're seeing immediately from this miss for the current quarter. they say for the full year they expect total sales to be up 4.5 to 5%.

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we have seen a resurgence as opposed to a macy's where they haven't gone as quickly. we'll hear more about this company. take a look at what happened there. it does expect to see earnings of $3.29 a share for the full year and that's a penny better than the street expected. >> look at that chart. you can see the two have been tracking home depot and lowe's for nine months but about four months ago they started to diverge. home depot is up 17% since june. lowe's up 5%. home depot dramatically out performed. it's going to add 15 to 20 home improvement stores throughout the remainer of this year. home equity lines of credit have

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increased again. remember those? big home improvement projects again. so not maybe topsoil, mulch and other small items but these are big projects and home depot talked about that as well. so it's back. >> the chairman, president and ceo says their year to date earnings performance was in line with their expectations. it's below what the street was e expecting but they have confidence in their outlook. >> outdoor power equipment and appliances were hot sellers. i could understand the appliance thing. add on a kitchen, put a new dishwasher. more people buying homes. they need to mow the lawn. >> i don't understand why lowe's is always -- i know the stock chart, they matched for awhile but operationally they're so far

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behind home depot. >> if you really look for the past couple of years wouldn't you argue that home depot has been the grand winner of this game, by a lot? >> the last few years, sure. >> home depot's operating margin is 12.5%. lowe's is about 8.5% so you have a big gap in operating margin. which tells you, number one, lowe's operating costs are higher and or their pricing power is less. >> well, he made the point -- about the real estate piece that home depot has significantly better real estate and that matters in terms of the location. >> that's not same store sales. >> but it might depending on where you're based. if you have better locations. >> i've been in lowe's and home depots this summer and every time i go in a lowe's they don't have things in stock. every time i've been in this summer that's happened. >> we treat them the same but they're supposed to be quite differment at one point lows was designed more for the casual

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shopper. had a wider aisle. less narrow. >> it used to be called the home depot with light. >> i never heard that. that's great. >> but home depot has really upped their operations and lowe's has suffered. i've been in and they have people that don't understand how to use, even trying to look up what's in the store and what's not. they've had me look up things on the website for them while they're standing there. it does seem like they're not up to snuff when it comes to having things in stock. that's something i've noticed this summer. >> 4.6% gains for same store sales. not too shabby. >> yeah. >> a coup of restaurants might like that number. >> why don we change topics and head to europe. german lawmakers are voting on the greek bailout. seema mody has the latest. good morning. >> good morning, german lawmakers are preparing to cast their ballot on a package approved by finance ministers last week this after 60 members

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of parliament in the conservative block voted against or sustained in a test vote. but likely she'll get the vote she needs. they have been pointing out there's no lack of participation from the imf. now the finance minister addressed parliament today urging them to back the program saying it would be irresponsible not to give the greeks a chance for a new start but also noting there was no guarentee for the success. in the meantime they're up against the deadline for a 3.2 billion euro payment. ministers are taking a tough stance against greece. some of the hawks have been voicing their concern. keep an eye on the german vote as well as the dutch vote in today's trade. >> thank you very much.

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>> now we'll discuss some markets. jeff gundlach this morning says he thinks it's a bad idea for the central bank to hike rates. if they begin raising rates next month it opens the lid on m pandora's box. joining us now is head of capital markets. and then on the economy, michael hanson is here. the senior u.s. economist at bank of america merrill lynch global research. you saw his argument. what's going to happen? >> we will see a rate hike in september and that's probably what should happen given the domestic economy and how much it has improved. it has been far from a flawless recovery but it's been a recovery. what we expect though is a very

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different path of tightening than what we've seen in the past. expect hills and plateaus. hills and plateaus. we're going to ease into tightening in a very gentle way. >> the argument is its more of a straight line. >> he believes once you start you can't stop. you definitely can't go backwards. >> that does not seem to be the intention of the fomc. they want to analyze data points as they move forward. i should not be a straight line. >> where are you on this? >> september probably more likely than not. obviously with china, the uncertainty has come up a little bit on that but if you look at the what the fed is focussing on its the labor market. they have been down playing inflation concerns but i'm not sure that's a clear path for them. a month or two ago it was stabilizing and behind us and

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rates are going up and today all of those things -- >> are we overstating or understating the china situation. >> when you look back in the minutes when they talk about china it's not about deflation or the dollar it's about the global growth picture so from the fed's perspective, if china is easing in order to address their domestic economy and that reduces the risk of a hard landing, from the fed's perspective that's a good thing. >> if i told you that commodity prices are going to plunge and the em markets are going to suffer -- >> you would have fed officials say that's transitory. we can debate that but that's been the response all along. on the second you heard sam fisher say we have to focus on the domestic market. we care about the spill overs but we have to focus on the domestic market. we would have hiked already. >> if i'm lucky enough to have some money, what am i supposed to do with it? >> look for volatility going into the fomc meeting and beyond that. >> is volatility a downward?

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is that what you're trying to suggest in. >> we could see downward volatility. >> our expectation is a miss match and that could leave opportunities for those looking long-term and need more equity. >> so the second we hear this is really -- is it become it really comes, when it really comes? you think we're having a little miniplunge. >> our expectation is that the fed is not going to message this well. chair yellen stated in the past that she doesn't need to message it because we're looking at the same data she's looking at. so expect the potential for some disruption when the fed announces, if it announces a rate hike. >> i know you're not a stock market guy per say, would you agree with that. do you think we're not going to know? do you think they're not going to tell you in advance? >> i don't think they're going to give a sign up in lights. we're clearly not going to get clear language the meeting

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before because that was july and we didn't get it. we got some indication. they're looking for some further improvement. that was a sign that they're getting closer. i do think that the fed learned the lessons from 2013 when they didn't talk the whole summer and the taper tantrum and the market got wrong footed around september. so there is, i think, a preference of the fed to make sure they get their message out there. >> why are we worried about china and the fed when we have the oil infrastructure relaxing. the drop could save.5%. that's a big drop. this is a creator of hundreds of thousands of jobs that has died. >> it's created 12 million since we hit bottom. we need to put that in context. most of the decline in the oil structure already happened. so there's a question --

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>> we don't know that. >> we know that from the standpoint of the gdp data coming up into the third quarter because rig count versus stabilize so the -- >> assuming that -- >> oil goes to 35 or $30 barrel you're right. >> but we've had a significant slice out of that. it's 100,000 or so. 260,000 in the last four years out of 12 plus million. so it matters but the economy is doing quite well despite that. >> okay. we'll leave the conversation there. thank you. >> thank you. >> all right up next we're going to go inside the report from lowe's. they came out with their earnings. the home improvement retailer reporting results a moment ago but is the stock a buy at these levels? plus a major customer data breach at dating or whatever you want to call it site ashley madison. >> that is not a dating site. >> it's 6:16 in the morning. what am i supposed to say?

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>> bad news for a lot of people many america perhaps. >> gives dating sites a bad name. >> yeah. >> but first before you head to break check out this day in history. when you're not confident you have complete visibility into your business, it can quickly become the only thing you think about. that's where at&t can help. at&t's innovative solutions connect machines and people... to keep your internet of things in-sync, in real-time. leaving you free to focus on what matters most. more and more, data is visual. in fact, the number of mris has increased by ten percent a year. and a radiologist might view a thousand images to find one tiny abnormality in shape, contrast or movement.

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welcome back everybody. we do have some breaking news.

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parliament approving the third greek bailout. this is the process taking place. the greek parliament passed it. it's going through the rest of the parliaments in the eu but they are approving it. germany's parliament just approved that eu bailout ahead of tomorrow's deadline for the next payment due to the ecb. brian. >> lowe's just out with their quarterly results. earnings falling a bit short of estimates although revenue sales did beat the streets. joining us to break down the quarter is senior equity research analyst, your quick take on the quarter. >> it's a bit mixed. you summed it up pretty well. sales were descent and good but earnings did miss. we saw a little bit of weakness but i suspect there was probably a sales mix shift. they called out a lot of the bigger ticket items. those are typically lower margins. that helped their revenue but

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hurt their profitability a little bit. >> what about same store sales growth? better than 4.5%. that doesn't seem too shabby. >> i was on your show yesterday talking about home depot. investors always look at lowe's versus home depot. home depot put a 5.7% comp up yesterday. lowe's was a 4.3. that spread is about in line with expectations. 4.3% comp is actually quite good. >> what is the one thing that concerns you? is it the margin line brian or something else? >> i think as the market digests these results the market will come with the opinion that this is a pretty good quarter. we see that lowe's doesn't operate as well as home depot but pretty good. >> if you were lowe's ceo and you could make one change in the

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business what would it be? >> that's a good one. i'd maintain for awhile. there are stores in the lowe's chain that are not as productive as they should be. this is easier said than done. it's easy for an analyst to say this but i would look closely and determine if there's something that needs to be done. >> brian you joined us yesterday. you joined us today. thank you very much. enjoy your day. we'll see you again soon. >> thank you. >> staying on the theme of the consumer this morning and what we're learning this season, courtney reagan is here to explain more about how consumer spending is shifting. it's been the topic. >> it has been for awhile. if i haven't said it before i'll say it again. post great recession the consumer spending habits have changed. consumers are spending but it's shifted over even the last decade. retail sales growth. bounce back post recession and it's pulled back a bit recently but still consumers are in a

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good place. that's also because we're saving more. the recession did such a number on our psyche that consumers were finally compelled to save and not just for a rainy day but for the future. in some ways, saving has really become the priority which is why many consumers consciously or not now place a higher value on spending discretionary dollars on what's permanent. making memories with experiences and placing less value on what's unnecessary. stuff. this was the consumers closet before the recession. lots of clothes. more than 3.5% of total spending went toward clothing. it sounds small but this is one of about 400 categories. now consumer spending on clothing is the category with the biggest basis point decline over the last decade. spending previously allocated to clothing is spread out through a number of categories. medical bills, prescription

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drugs, housing, education, those have gone up but so too has spending on discretionary, memory making categories like leisure travel, recreation and restaurants and we see those from various data sources. consumers are skipping spending on the material things and opting on the experience. we're spending just not on the stuff. department stores hit hard. >> can i play devil's advocate. a is it really permanent and the second piece of it is is that so many say that fashion has not -- there's not been break out fashion over the past couple of years where people have run out to get the skinny jean or this or that. there hasn't been these phenomenons in the way there has been in the past. maybe that's a function of what you're talking about but maybe it's a function of the fact that

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maybe the fashion isn't as forward leaning. >> in some respects but we didn't see skinny jeans as much as we have in the last couple of years. the color denim was hot. we have crop tops and this new boho chic look. i'm not sure that fashion hasn't been there. maybe it's not as compelling and new as we've seen before but aparallel spending in some places is higher. department stores is the category with the biggest decline. >> this is grasps for reasons but we also talk about how younger people are living in the cities for longer. they're urban dwelling and you don't have as big of a closet if you're in the inner city. >> that's one of the reasons that goes to all of this. there's so many great things to talk about but we've seen migration maps that show people leaving rural and suburban areas. >> you're more likely to eat out. >> and the restaurants -- if you map the restaurant same store sales verses the apparel same store sales, you can see this

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huge spike where folks are just spending more time-out. spending more time with people. i'd rather go out to dinner with you than go buy a sweater. >> is there anything about cheaper fashion clothes? the if phenomenon. >> it's not that we're not buying clothes. where we're buying and what we're buying is differ. we're leaning toward the fast fashion. we would rather pay less for a trendy item than spend so much money on it because we don't value it like we used to. >> a good friend of mine helps run a big retailer and i've said this before, it's the home and car indicator though. that's the thing. if we see a slow down in retail sales people say the consumer is dead when in reality maybe they're buying a house or a car. even if you lease a car you have to put three or four thousand down. you have to buy couches and stuff like that. i wonder if the consumer is strong but they're saving because they want the big thing

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so we can't look at it like a negative. >> durable good sales have been strong. >> lowe's pointed to appliances this morning. i need new dishwasher. so i wonder if we can't look at it like a negative or things are changing it's just that the housing market is back and it's going to steal from everywhere else. >> we do have a graphic that shows you the different increases in home purchases. this is home furnishings versus aparallels. they're higher over the last number of years. they're coming down a bit because how many new couches do you need to buy? but people are spending more on their homes because they want to spend more time with people in their homes and that's all part of the experience. that's what they're investing in. what's permanent. not things that are fleeting. it's a very big play on our psychology. whether we realize it or not a lot of our spending habits and what we value have really

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changed. consumer behavior is fascinating. >> are you saying that memories matter? >> to a lot of people. whether they had that solid thought or not. has your spending changed since 2008? when companies disappear. >> well i had a kid last year at 43 years old. my spending has changed. you're welcome, kimberly-clark. going through a lot of diapers. >> i used to buy a lot more clothing than i do now. now i've got this do i really need this? i spend more on travel. i see my friends more. i didn't purposefully make that change but somehow it's happened. >> that's beautiful. >> it is. frugal and millennial. are you a millennial? >> i am a millennial. which by the way millennials aren't all lazy, sometimes the show gets a little down on millennials. >> i'm going to point that out. >> millennials are over and

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gen z is now the focus. millennials are -- their time has gone. >> i'm an old millennial but i am one. >> we appreciate it. coming up when we return, this is a story a lot of people are going to be a little anxious about. a data breach at ashley madison and the owner of the cheating website is slamming what it's calling moralizing hackers. but first as we head to a break a look at s&p 500's winners and losers. ♪

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welcome back to squawk box. we're in the chairs looking at stories catching our attention this morning. the big one is catching my attention but don't read into this too much, ashley madison, a website known for cheaters has been hacked. we talked about it being hacked but now a lot of this information is getting released online. some 32 million user of the social networking site, that data, all of it, names, addresses, phone numbers, credit cards, you can go online into the dark pools of the world and if you have suspicions about

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your significant other, you might go on and search to find if they were ever on this. since 2007 and apparently this hacker -- ashley madison is very happy at saying that they are moralizing. these hackers are moralizing what is going on. >> usually i get upset about these hack situations. these hackers want ashley madison shutdown because they don't believe in it. they are morally onnffended. >> their slogan have an affair today on ashley madison. thousands of cheating wives and husbands set up. with our affair guarentee package we guarentee you will find the perfect affair partner. >> the hackers say after looking through all of this information is that 90 to 95% of the users are men. there's thousands of fake women accounts on there. actually most of these people don't end up hooking up on the site. you get sucked into it, they claim. and you may not have ever found

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a hook up but they're going to post your information for looking. >> who hasn't been hacked? the list of organizations and companies that hasn't been hacked might be shorter than the list of those that have. >> they're going to go after the porn sites next? it's very interesting what could come out from all of this. anyway, a quick shout out by the way, we have a viewer, a very challenging viewer named ace ellis that challenged me today, he watched scott yesterday wearing sneakers and out there sox and he thought i was incapable of this fashion trend. so i tried to make up for it today. scott wore sneakers. >> i think he wore those sneakers. >> yeah, cool sneakers. >> are those scott's shoes? >> they are not but ace ellis seems to watch us regularly and seemed to think i was not as fashion forward so i thought i would do this to his benefit.

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>> does a chelsea boot say anything? >> i don't know. >> i thought i'd try. >> i can kick. >> does that have a metal toe. >> no. >> my story is much more boring than yours is so i feel bad now. >> go for it. >> the cover of the ft, emerging markets rocked by a trillion dollar capital flight. we talked about how brazil, venezuela and russia were sinking fast, the emerging markets etf, the eem which is by the far the biggest etf has wiped out all of it's gains over a decade. if you invested in the eem you made zero now. you stayed invested. over a decade. we keep hearing about how they're going to be the saviors of the world economy and everything is great and that's where you want to be and the united states, good old us of a has been a greater wealth creator. of course they're 50% china, taiwan, and korea.

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america is going to benefit from that. capital flight here will continue. >> that is boring compared to ashley madison. >> although probably much, much more important. >> investors cheating on venezuela with america. how do i sex it up? >> it's a huge important trend. >> hugo chavez was on ashley madison. we found that out. >> on the site? >> let me tell you about another story i've been watching. the old tag line it's not your fathers buick. >> no, olds mobile. >> okay. gm has a new plan to make some of these buicks in china and turning around and selling them in the united states. that's running a huge pressure from the uaw which is coming up in talks a head of it. >> that's a bad idea. >> if you juan to buy american -- >> i'll tell you why it's the bad idea. at some point during the show could we bring up the land wind

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x-7? do you know what that is? >> no, so i'm a car guy. do you know what the landrover evoke is? high, short, stumpy car, whatever. some people like it. some people don't. unique styling. >> right. >> all of the viewers, if you're not driving just google land wind x-7 it looks remarkably like a landrover evoke down to the lettering and the font chosen for the front grill and it's made in china for about a third of the price. and ask boeing about what the new chinese made jet -- >> in terms of ripping all the stuff off. >> looks like the 737. >> i think the uaw has a point with this and this is something that's not going to fly in american politics right now. you start thinking about gm starting to take more jobs overseas after getting bailed out by the united states. you a political problem. >> if you go to beijing or shanghai buicks are very

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popular. >> they are. you're right. >> they could sell them there. but don't try to take these buicks that are american cars and make them overseas and bring them back here. >> or just sell them domestically in the chinese market. >> no, they're going to make them in china and sell them back here. >> because they're going to sell more in china. >> it's cheaper. >> cheaper an once you get the assembly plan. it probably makes sense to assemble some in china. >> the uaw has a point. if you think you're going to be selling buicks that you made in china after we just bailed them out. >> i'm not one step closer to owning one. which apparently means eastern wind or something. >> we're going to try to bring it back to ashley madison in just a little bit. >> what do you drive? >> uber. >> next -- >> all your cars are yellow with a like on top. >> occasionally black. a bicycle.

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>> mark granlt of southwest securities is ready to unload on everything from china to greece to wall street. as we head to a break. here's today's currency check. we're back in a moment. ♪ when you get up to 50% off hotels with travelocity,

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welcome back, everybody. our next guest is sounding the alarm that a hard landing could be ahead for china and warning the restructuring deals could blow up. joining us is mark grant. for a guy that spent the entire

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summer on a boat floating around the country you have a grim outlook in what's happening in the financial world. tell us where you think we stand right now. >> certainly. china is in big trouble. you're seeing copper at a 13 year low. copper is almost at a 13 year low for the wti oil and i think their economy is in real trouble. also as evidenced by the devaluations which china did which is really a three-day devaluations. you're getting significant signals out of china that the economy is slowing. >> just because you brought this up with wti over the last couple of sessions, do you think that oil at these prices is a demand picture because of what happening in china and other

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countries? we look at it as a supply issue. we have so much fracking bringing out new supply at the united states. >> to be honest i think it's both. i don't think it's one or the other but i think it's both. the fracking issue has radically changed the world for the last 50 years. we're in a whole new environment which is great for the united states because we'll become a major supplier of oil. this minimizes the radical nations and some of the oil producers such as venezuela, brazil, certainly the middle eastern players. i think oil is going to 40. i think it's based upon one of the most prominent bankers in the middle east. it was 54. he said it was going to 40 and said it was going to stay there and i believe him. >> what about happens with the ten year note? you called that right last year. that we wouldn't see higher rates when it came to the ten

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year. it's been like that this year too. but now you have the fed raising rates next month. how does that change the scenario? >> well, interestingly enough becky the ten year started at 217 and today it's 218. >> yeah. >> so it's dpon nowhere for the year like the american stock market. the stock market if you were indexed for example has gone nowhere for this year. we'll go back under 2% for the ten year. i don't think given what's taking place in greece and china and our own, by the way, financials i don't think the fed is going to do anything, people said they were going to do it last marchand it's going to be so minimal you'll see a continuation of the flattening yield curve and 2015 is going to

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be going nowhere. >> you think the stock market is going nowhere too or do you think all the huge concerns around the globe end up with a correction or worse for the stock market? >> i think the stock market is open to a direction so we're either flat you're going to get any appreciation or you'll go down and the deteriorating economics in europe means and the strengthening of the dollar means that corporate earnings, corporate revenues are going to be down in america and then you have the demand from china being down and then the oil price that is very bad for capex and spending. it has a number of negative implications across the board. >> all right. mark. we appreciate your coming on. i'm glad you're back in fort

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lauderdale. >> thank you. >> been following your travels. we hope to see you again very soon. >> thank you becky, very much. >> thank you. when we come back this morning, supporting our troops. namely the men and women of the navy s.e.a.l.s. how one group is picking up the challenge of helping out the families of the elite fighting force. that's next, right here on squawk box.

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there are more than 2,000 active duty navy seals deployed

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in 80 countries around the world, and we want to introduce you to an organization that is helping these navy special seal warfare families. they're raising money and awareness about the challenges this group is facing. joining us now are two women at the heart of this effort, megan and kristen. we're not saying your last names out of respect for your husbands. god bless them for doing that. >> thank you. >> thank you both for your service as well, because it's hard on the families. it's hard on the men and women serving, because they have to be away from you guys, but it's also hard on you for having your husbands or spouses away from you. so what is this foundation trying to accomplish? >> we're having our first event here in new york, and we're really excited about it. this is our first time we're going to new york. and it's a big event. we're raising awareness for families. we're raising awareness and funds to support families and, you know, to provide programs and to support them while the guys are away and while they're home and to build family resiliency. >> what kind of programs -- you've raised two million so

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far. what kind of programs do you have? >> so we have programs that support special needs children. and educational needs for them. we support graduation dinners. so once the guys come through their training, we support -- we're there with them from the beginning to the end. and we just, you know, provide an arm to support and how we can best handle that. you know, we do a lot of other emergency needs and gold star family support. >> what's been kind of remarkable i think is watching how such a small portion of the population has taken up such a large responsibility for making sure that when we're overseas, when we're fighting in wartime, when we are involved in these situations, i think the rest of the nation doesn't necessarily recognize what's happening. do you find the same thing? is it better to get out and make sure the word is getting out so that people recognize what's happening? >> yes, it's nice to know that we are getting the support now for the families. ultimately it comes back when our husbands are out and being operators and doing the hard work. we're at home taking care of the children. if we didn't have the family

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foundation here to help support us with the needs of the children and even sisterhood, a lot of times, you know, kristen and i, both being wives, we need that time to be able to share our same story, because we're going through something very different that other women are not going through. and so it's nice to have somebody to bounce upon or say hey, can you help me out with my kids? >> how long do you tend to find yourself alone. how long do your husbands go away for? >> that's a great question. you know, they go away for anywhere from six to ten months at a time and half of our marriage, he's been gone. >> and a lot of time, i know with any special forces, whether it's army or whatever they might be, is there a lot of times where you literally don't know where they are because they can't tell you? it's not like i'm stationed at an air force base, you know where i am. it's i'm gone, i can't tell you where i'm going. >> exactly. and a lot of times, you kind of have an idea where they may be, and a lot of times they may get pulled quickly.

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you just never know. >> do you get random calls? there's different movies where you see people out there in the field calling their wives from literally the battlefield. >> right. you do. a lot of times, technology has saved us in a lot of ways that you may not hear from, and then you wonder if you're getting that call, that are they okay, are they not okay? once they come back to their normal element of where they're based, it's nice to know that they are back. with the technology on the field, it does help. >> where are the biggest additional needs? where would you like to start if you had the funds to do it? >> right now we're just trying to focus on our programs. we're a pretty small non-profit based out of san diego. we're just trying to grow and kind of manicure the programs that we have, so we like to focus on emergency support. because, you know, being in this field, a lot of those needs come up. so memorial support and that type of thing. eventually if we have the funds to grow, we'll be able to reach a lot more families, but that's our thing, reaching the families

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and coming up with those needs. >> all the armed forces are amazing. we all know the navy is the best. son of a nine-year navy man. so how can people help? >> just, you know -- like i said, we're having our event here. we're really excited. attending the event, supporting the families, going to our website, just raising awareness about the special unique families, and, you know, what the life is like to be a part of the special warfare community. >> megan and kristen, thank you. thank your husbands when you see them next for all of us here, because they're doing awesome work, and they're kicking butt. >> thank you. >> thank you. appreciate it. straight ahead this morning, the nuclear deal with iran. are crumbling infrastructure and the 2016 election circus. just a few of the topics for our guest today, tom friedman of "the new york times." tom will join us after this quick break. ♪

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stocks swing by nearly six person in china, but not without giving investors a case of whiplash. up next, the fed and the key report that can tell us what janet yellen might be thinking come september. the fda approves the drug nicknamed female viagra, but with the green light comes a strong warning. that story straight ahead. plus, china, iran, isis. the world according to tom friedman. the pulitzer prize winning columnist is our guest. second hour of "squawk box" begins right now. live from the beating heart of business, new york city. this is "squawk box."

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>> welcome back to "squawk box" right here on cnbc, first in business worldwide. sullivan is with us today. joe is out. we've got two young successful golfers facing off last night to tell you about. far away, though, from the golf course. 2015 major champion dazach johnn and jordan spieth were both on the mound and it was for a good cause. we will tell you about it a little bit later this hour. but first, let's get down to business. take a look at what's going on. u.s. equity futures this hour. dow looks like it would open down, off about 42 points. nasdaq looking to open lower as well, about six points off. check out this chart of the overnight session in china, rather. the shanghai composite dropping more than 5% early on before closing up by more than a percent. a bit of a roller coaster. traders point to lik government-backed buyers. brian? >> among your top stories at the

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7:00 a.m. hour, in europe, the german parliament approving a third greek bailout. athens facing a deadline tomorrow for a key repayment to the ecb. in corporate news this morning, lowe's posted quarterly estimates. earnings per share did fall short. that stock down 1.4%. yum brands announcing new leadership for its china division. the company veteran is leading ceo of the group. andrew? >> on the squawk planner today, here's what's going on. a key piece of data on inflation and the minutes from the last fomc meeting. the july -- excuse me, the july consumer price index, that's beginning to be released at 8:30 eastern time. at 2:00 this afternoon, everybody's going to be paying attention to this one. we should get more insight into what fed policymakers talked about last month and perhaps what they're thinking about the highly anticipated september gathering and whether a rate hike is in the offing or not.

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jeff gundlach is saying it's a bad idea for the central bank to hike with junk bonds at four-year lows. he argues if the central bank begins raising rates next month, it opens the lid on pandora's box of a tightening cycle. so the debate continues as to what should happen. >> our guest host this morning is pulitzer prize winning columnist tom friedman of "the new york times." we have a lot of ground to cover from the iran nuclear deal, to falling energy prices, to tom's new column this morning, the world's hot spot, in which he says that the arab world is preoccupied with centuries old conflicts, while mother nature is bringing potential annihilation to their doorstop. on these light topics, we welcome you. >> have a nice day. >> exactly. anyone who wasn't up and ready to go. i want to start off with the iran deal, because this is front and center. you now have a second high profile democrat from this region who has said he will vote against this. menendez saying he'll vote against it. we already knew that chuck schumer said that a few weeks

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ago. make the case for why this is something that should go through? >> well, i've viewed it from the very beginning, becky, as the best bad deal you can get. i say a bad deal only in the sense that when iran realized that the united states and its allies would not use military force to take out its nuclear facility, that table of negotiations became very flat. >> but when you say the united states and their allies not going along with that, i would count the israelis. >> absolutely. >> as somebody who would say -- >> the israelis, they decided they weren't going to use military force. we weren't going to use military force. the table became very flat. at that point, it became what you could get out of it. i think it is still much better deal than any of the alternatives. you're taking iran's nuclear program from being three months away from a bomb to being a year away from a bomb. you're removing 98% of their

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potential bomb-making material. you're buying 15 years, and for 25 years, you're buying total observation, obviously. if they don't cheat and the system works of their entire supply chain. >> what's the alternative? >> do you believe that they won't cheat and the system will work? >> i certainly wouldn't depend on them not cheating. so the one thing i've argued for is that i would love to see the congress pass this deal but accompany it with two things. the congress should authorize this president and any future one to use any means necessary to prevent iran from getting a bomb. they should know that any president has in his or her gun a loaded pistol should they move in that direction. >> within the next ten years or forever? >> i would make it open-ended. let me just finish this point. and the other thing i think we should do is very quietly move into the region. we have this 30,000-pound bunker

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buster bomb, we're the only ones that have got it. it can cut through any mountain to find any nuclear facility in iran. and let the iranians know that it's in the region. at the end of the day, this is about deterrence. and they need to know that if they cheat, iran's not going to get a bomb. and for me, it's nothing to do with israel. this has to do with nuclear proliferation. i mean, preventing the spread of nuclear weapons has been a fundamental principle of americans. >> they have an economy that needs help. and they need to sell their oil to us and others who have been banned. they don't have 100% of the br beguning power here. they are in desperate straights economically. >> that's why they signed the deal. >> you're describing the deal that we got. it's a deal that allowed them to maintain their basic nuclear infrastructure so they will be a threshold nuclear power, you know, one day. and that's the big complaint of

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the critics. they think we shouldn't force them to basically give up their entire nuclear program. i would argue we did not have the strength to do that because we weren't going to use military force, but we did have the economic reasons. >> i'm curious about the point you're making about the enforcement over the next ten years, in terms of keeping them from ever getting one. they think in ten years from now, they've got a shot on goal. >> remember, iran has said we're not -- this is what they've said. we're not going for a bomb. that's not our interest. we have no desire to do that. obviously i trust them as much as i can throw this table. but the point is, andrew, we are so much better off with a year, you know -- a year preventing a breakout than we are three months, number one. number two, i believe there's a group of people we have not heard from at all in this story. it's the iranian people.

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the iranian foreign minister was not in vienna for tourism. let's remember -- i may have made this point before on this show, so pardon me if i did. let's go back to the iranian election that brought these reformers to power. they allowed five men to run. they were mr. black, mr. black, mr. black, mr. black, mr. slightly light black, called rouhani. and the overwhelming majority of the iranian people rushed to vote for the guy that was just a little lighter black that the others. for the reasons brian's talking about, they're being squeezed. so the iranians have a fundamental interest in making this thing work. they were not there for tourism. >> two questions. do you believe the president when he says that they would otherwise have nuclear weapons in the next year? meaning do you think that that's real? >> well, they would certainly have the potential. right now they have enough missile material to make about ten bombs and we believe that technologically, they're about

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three months away. whether they have the delivery systems, that's another question. the israelis would tell you the same thing. i don't think that's something barack obama's made up at all. >> what strikes me with this is that i can understand that you don't want to put any regime in a corner because any animal forced into a corner is a dangerous animal. i'm not convinced that letting them out of the corner then makes them more rational. that becomes my problem with trying to make the jump from there to here. i understand we don't want a regime that is willing to do anything. >> you're describing exactly why, the way i've approached this deal is, if you're against this deal, it doesn't make you dr. strangelove. if you're for this deal, it doesn't make you neville chamberlain. it's a really hard call. for just the reasons you've described. i simply say on balance, this is where i would make the call. because i think having them a year away rather than three months away -- the other point is this. the israelis have a very

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sophisticated defense industry. i guarantee you over the next 15 years, they'll be developing technologies that will be far and away better for them to detect and deter. >> i understand your point of saying if we put this bunker buster -- if we put that there and give the president the authorization to use it that we have the knowledge that something's gone on, i get that. my two concerns with that are a, do we have the intelligence to know that they are three months away, that they are six months away, that they are cheating. and b, do you have a president who will say yes, and if they are, i'm going to use it tomorrow. >> that's always been the question about obama. but it was the same question about netanyahu. there was a big divide in the israeli military establishment. he came out against trying to take out the iranian facility because the question is what happens the morning after? do you mow the lawn? and what's more, israel would receive thousands of rockets. >> how much of this is about

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commerce? i was in egypt a few years ago. the clamor for western brands was so strong. they wanted to buy levis. iran is a huge country. they have as many as california, texas, and florida combined. it's a massive potential for american and western companies. do you think there's economic pressure being put on our administration to open up iran from a commerce perspective? >> i don't think that's really a decisive factor. obviously boeing -- they're cobbling together boeing planes and getting spare parts from all over the place. but it gets to the point i was talking to becky about earlier, which is the party we haven't heard from are the iranian people. we know they drove this regime into this negotiation. and once that economy opens up and commerce is there, there's going to be a huge interest. a friend of mine remarked, he said i'll bet you any amount of money that the first mcdonald's that's opened up in teheran will be by the revolutionary guards. i mean, these guys are going to

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jump on this opportunity. i don't want to diminish it. it's a real threat. that's why i want some extra deterrents on the table. i don't want to trust this. but on balance, you know, you don't do this -- then what have you got? iran three months away from a bomb. crumbling sanctions. and you have israel i think much more diplomatically isolated than iran. it's a really hard choice. i respect everyone on both sides. that's where i come down. >> i will say that i think people on both sides of this argument are looking at this with what they think is in the best interest of the united states. >> i think it's been a very legitimate debate. i could argue both sides of this. i come down, because on balance, i believe the iranian people are going to be a big pressure point. the point i worry about is really -- i think the most dangerous point is actually ironically if this all succeeds and the regime starts to fall and threaten, that's when i'm

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worried about iran. where the regime feels it's coming down, and that's when i'd be most frightened. >> tom is our guest host. he's going to be with us for the rest of the hour and we have much more to talk about. >> a lot more to talk about, including this following story. joe biden called laguardia a third world airport and it isn't the only u.s. hub that's crumbling. phil lebeau has a special report on solutions. then, with oil prices plummeting, are drillers right for consolidation? we'll talk to the ceo of the texas bank cullen frost. chuck todd is going to join us to talk about what makes donald trump resonate with the gop. stick around for that and a lot more. we return in a moment. the mercedes-benz summer event is here. now get the unmistakable thrill

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vice president joe biden's comments on laguardia airport made the aviation infrastructure problem a front issue. listen. >> if i took you to laguardia airport in new york, you must think i must be in some third world country. i'm not joking. >> since then, laguardia has announced a $4 billion plan to upgrade its facilities, making it the newest airport in 20 years. but is it really addressing the core problem, or is it just as critics suggest adding lipstick to a pig? phil lebeau joins us from

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america's newest airport in denver, colorado. good morning to you, phil. >> reporter: good morning, andrew. and this airport, even though it is america's newest, is now 20 years old, and 20 years ago, people said why build an all-new airport? this has become the poster child for the advantages of building an all-new airport. this airport, even though it is 20 years old, it still has the ability to double in size in terms of its infrastructure. the entire land around this airport, including the airport, the size of manhattan. they still have room to add up to six more runways. they already have six runways and they could also almost double the number of passengers in here, and right now, they're already the fifth busiest airport in the country. >> there's no question that 53 square miles gives us an advantage over laguardia, over l.a.x., over all the encapsulated gateway airports. that is the future of this airport.

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>> reporter: the future being those guys are landlocked on both coasts as well as the other airports around the country, so denver can continue to grow. what about laguardia? yes, the proposal is there to build an all-new airport at laguardia, but remember, that will not include new runways. all of this gets to the central question in the united states, when it comes to airports. should the country and governments around the country be investing in new terminals, new runways? look at how we lag the rest of the world in terms of infrastructure investment when it comes to new airports. guys, i was at this airport 20 years ago as a reporter here in denver. and at the time, there were people saying, don't build it! it's going to be a colossal mistake. you see how this airport has grown and how many people come through here. it is the poster child in the airport industry among all airports for why you build a new airport, because over time, it will grow, and it is an investment that has paid off here. >> okay.

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phil lebeau, thank you for that. let's now get to our guest host this morning, talk a little more infrastructure with pulitzer prize winning columnist tom friedman. you're desperate for a better laguardia, too, right? you've got to be. >> you know, andrew, i took the train up yesterday. i mean, and you get off at penn station, and you try to get on those escalators -- >> i'd kill this. i was a new jersey transit commuter for years in new jersey. it's a disgrace. >> those escalators, i think they were invented before suitcases. because you squeeze your way off the train. >> it's when america was thinner, too. >> no, no. it's dangerous. i mean, new jersey transit and amtrak, they bring two trains in on the same platform. you've got 7,000 people trying to go up one staircase. god help us if there's a problem. it's a disgrace. you've been all over the world. i've traveled enough. america's a joke when it comes to infrastructure. i'm sorry you're hitting a hot button issue for me. if i dropped a piece of pizza on

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the floor in dubai airport, i'd pick it up and eat it. now, maybe that says more about me than dubai airport. look at voila guard what laguar. how about fixing the radar system, which is why we're delayed. the radar can't handle it. or more runways. >> when you fly from singapore to l.a.x. >> i have. >> it's like flying from the jetsons to the flintstones. l.a.x. has this retro sort of -- but one of those '60s diners. but it wasn't actually designed. it literally is like a '60s diner. let's get to the core problem. we've got a transportation bill. okay? now locked in the senate and the house. the senate passed a six-year -- its own version, funded only for three years. in part by selling off part of

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our strategic oil reserve which is meant there as a rainy day fund. i assume the house will come up with their own version. maybe they'll sell gold from ft. fox to p knox to pay for this. or paintings from the national gallery. what is this about? we can't agree on a five cent a gallon gasoline tax anymore. to pay for the roads and infrastructure, in the case of the transportation bill, that we all use. and that's crazy. >> it hasn't gone up since 1993. adjusted for inflation. it's actually about 12.5 cents a gallon. fuel mileage has gone up. so they get less money. but i will say this. nobody wants higher taxes except people say well, listen, i would go for a higher gas tax if i knew they were going to spend it on actual infrastructure improvement and not steal the money for something else. right? and i'm going to do something i thought i would never do in my entire life. i'm going to defend amtrak.

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amtrak was punished for being successful last year. they cut funding on amtrak by i think a couple hundred million or a billion dollars because they did well. >> but this is about understanding the difference between an expenditure and an investment. okay? i mean, that's why we do tax ourselves. ultimately, we have to make these investments. and when you can't do that -- i've always gone back, how do we get here? how do we become this great country? it seems to me, there were five things that all our great presidents signed up for. and that's how we got here. infrastructure, best education, okay? the best rules to incentivize risk taking and prevent recklessness. government funded research to push out the boundaries of physics and chemistry to pluck off the best ideas. and immigration. both high end and low end. and then we've got the energetic low-skilled, and the high iq risk takers.

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those are the five bedrock principles that got us where we are today. what is the debate going on today, okay? it's like, let's take down all five. that's a prescription really for -- it's just dumb as we want to be. let's just be dumb as we want to be. >> we're going to leave it on the dumb as we want to be comment for now. you're going to be here -- we can continue this conversation in just a little bit. in the meantime, when we come back, a big bet between zach johnson and jordan spieth and it has nothing to do with golf. we have that story when "squawk box" comes right back. time now for today's aflac trivia question. which state is home to the arizona beverage company, producer of prepackaged ice tea and energy drinks? the answer when cnbc "squawk box" continues. ah! aflac? aflac!

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welcome back to "squawk box" here on cnbc, first in business worldwide. among the stories front and center this morning, mortgage applications rose 3.6% last week on a jump in refinancing activity. refinancing hit its highest level in three months as mortgage rates edged lower. the fda has approved the so-called female viagra, that's a new drug made by privately held sprout pharmaceuticals. the drug, which is designed to increase sexual desire in women, will carry warnings about low blood pressure and other side effects. we are just about a half-hour away from the latest earnings from target. the company is expected to post a profit of $1.11 a share.

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same store sales increasing by .23%. are consumers bailing on apple music service? 48% of trial users have dropped out, but apple says only 21% have opted out of the service. apple music currently is free. the users have to start paying in october. so that's going to be the big deadline to watch. and check this out. 2015 major golf champion zach johnson and jordan spieth competing against each other last night. but not on the golf course. they threw out the ceremonial first pitches. british open champ johnson towed the rubber before the chicago game. the cubbies clocked that at 95 miles an hour. hmm. in texas, masters and u.s. open champion jordan spieth took to the hilton mariners-rangers game. he uncorked a nice curveball in the middle of the glove of josh hamilton. he then posed for pictures with

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hamilton and some kind of a scary scottish horse. who threw a better pitch? >> those were pretty good. >> they weren't bad. the price of crude plunging close to 30% in just the last two months. that major drop contributing to a number of high-profile bankruptcies. the gulf of mexico drilling contractor hercules offshore. now, some reports sunlight that ba -- suggest that banks are preparing for more. really glad to have you here, because this has been a super hot topic. a lot of concern about banks, not just yours, that have a lot of -- probably going to be bad bank loans on their books. how bad is it, or how not bad is it? >> well, i think we're in a different time. if you look in january, when we tested our oil down to 37.50 and we were okay, i thought it was going to be a v-shaped turn. there's no doubt that now we're

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in a u-shape. with the iran deal, we knew it would bring $10 or $15 off. that's where we are. you've got china slowing down. so it really gets down to -- it's always about leverage. those companies that have got too much leverage are going to have proble. >> that's the concern, mr. evans, because this time it is different, although the oil cycle has gone up and down and up and down, 15% to 20% of the $2.5 trillion junk bond market is oil and gas related debt. more than ever. >> right. >> how bad is the debt situation? >> well, the junk bond, and obviously we don't do junk bods, but we're in good position with on the oil and gas. so that's the reason i feel more comfortable. plus, this is a bank that really concentrates on who we're dealing business with. and relationships. but are the junk bonds going to convert to equity, and when you take that junk bond debt and

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convert it to equity, you solve a big problem there. and the other thing we've got to remember, how we got into this is we had too much money chasing too few deals. and we still have a lot of money on the sideline, wanting to buy properties. >> you know, dick, you said you tested it with wti oil prices as low as 37.50. did you test lower than that? >> no, we didn't. you can keep picking numbers until you can make a bad case. but the other thing, when you test that, also remember, in our particular case, when you look at the molecules that are pledged to us, about half are natural gas and half are oil. and natural gas has been low for a long period of time. in fact, it's one of the positives to texas economy because it's driving the petrol chemical plants and it's got a low cost. >> tom, you spent a long time writing about energy. perhaps solar energy and wind energy and the implications of this. >> i think one of the most interesting things going on, i

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don't see renewables driving us from 37 to 20 or 25. i think the factors that dick's pointed out, iran obviously, the slowing of the global economy. i'll tell you another thing people are watching. that google and apple have both become energy efficiency companies. google bought nest. it's going to be a huge efficiency play. i watched my daughter sitting in the living room in california turn down the heat in her apartment in washington, d.c. using apple home energy management system. and i think people haven't paid enough attention to the efficiencies that are steadily rising here. i think we'll have a role to play in the future. >> don't you think that's good news? >> it's great news. we know the conservation, as we watch these cars go by -- i mean, we've got plenty of uses of energy, and so efficiency is a healthy part of it.

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and we're still going to need oil. and a lot of it. >> to me, the scary thing is you've got all these middle east governments who have budgeted basically. their national budget is at $100 a barrel oil. what happens to them? what happens to putin? saudi arabia, people are paying attention. they're running their all-time highest deficit this year. the imf reported they're about to dip into their reserve for $150 billion this year. in one year, they're going to eat away at a fifth of their basically reserves. in political implications, this could be enormous. >> and they're in better shape than a lot of others. >> i'd like to get back to the debt, if we could. i'm looking at a lot of first-year securetized loans. it's not equity. this is top tier capital. how many oil and gas companies are going to go bankrupt if we stay at these levels?

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>> well, the tier date, you're mainly talking about public data, obviously. >> they can hang on until they hit that maturity wall. but when that debt wall comes, you're not going to refinance that. >> well, i'm not in that market. >> what about all the funds? there's lots of money waiting to buy these opportunities. and so to buy something on 20, 30 cent on the dollar, 50 cents, whatever it is, that to me is where the solution is going to come. and there's lots of opportunity. >> so do you believe that we are going to be able to pick up some assets at 20 and 30 cents to the dollar? >> i think we could. certainly in the debt market you're talking about. so far, there hasn't been that much activity. what we're going to see -- i think october and november, when we had the redeterminations of the debt, of the reserves and

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really see what price, how much -- we've got to also remember that the efficiency and the drilling, even in the first six months of this year, it's up 50%. >> i think that's been one of the amazing surprises. saudi said hey, we're tired of this north dakota fracking thing. we're going to take the price to 70. they made money. we'll take it to 60, they made money. we'll take it to 50, they made money. the speed at which they've been able to apply technological innovation to keep this going has been remarkable. >> and right here in texas. we're doing it, too. now everybody's in the honey hole. they're not out discovering new territory. >> dick, thank you very much for joining us today. >> thank you. >> thank you, sir. coming up, donald trump maintaining his lead over the gop presidential field. today he's heading to new hampshire for his first town hall meeting. chuck todd is going to join us to break down the gop presidential field when we return.

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welcome back, and good morning. 6:41 in chicago. your equity futures indicating a possibly lower open right now by about 53 points in the dow jones industrial average. andrew? donald trump maintaining his commanding lead in the polls for the gop presidential nomination. joining us now with more on why trump resonates and whether the

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rest of the field can catch up is chuck todd, the moderator of "meet the press." our guest host is tom friedman and he's still with us. chuck, it's great to see you. we haven't seen you in a while. >> oh, yeah. >> help us understand mr. trump. help us understand this. we all have talked about him being a sideshow that eventually goes away. but he hasn't gone away. so what is it that makes him go away, or is he not going away? >> well, look. i think the next inflection point with donald trump is what happens when he inevitably is not always polling in first place? every frontrunner -- and while he defies political gravity and he's defied conventional wisdom, every frontrunner dips at some point. how does he handle not being in first place? being in first place is a big part of his message right now. he loves to talk about it. it's almost like success breeds success. that's sort of his mindset i think, and the more he leads in a poll, the more that's

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important to him, to come pain about. and he uses it i think to rally people. so i think the next inflection point with him personally is what happens when he dips, what happens when he's not in first place. >> what about the policy piece? you pressed him quite hard on sunday over so many different policy issues. and there was an argument to be made that once he starts talking about policy, that it becomes tougher for him, and yet not so much. doesn't seem to look that way from the polls. >> well, it depends on what the policy debate is. i mean, if it's immigration, he cares about -- basically, you get the sense he cares about two issues passionately. trade and immigration. other than that, everything else is very transactional with him. that's the sense i got in interviewing him. when i would ask him about nato and ukraine getting into nato, he would be like, well, they're in, they're out, i don't really care that much. you talk about isis, well, look, we've got to put more troops in here. but there isn't a philosophy to it. there isn't a doctrine to it. his passion is trade. he believes he's sort of a --

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and if you look historically in american history, he's a nationalist. he cares about trade and he cares about this immigration issue. as long as he can keep the focus there, then i don't think the other policy stuff matters for him right now. i mean, let's just look at immigration. he's taken -- it's not just immigration. the issue of birthright citizenship and he's just plopped it right down straight forward into the entire field and it's totally divided the republican field. and it's put -- frankly, unless bush or rubio is the nominee, they're really the only two candidates that said no to ending birthright citizenship. i think this becomes a bridge too far for hispanic voters in a general election if it's any other candidate. >> tom, on the immigration front, i'm curious what you thought of trump going after mark zuckerberg. i don't know if you saw. >> i saw a little of that. two things that strike me in listening to chuck. one is that you realize that a year from today, barack obama

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will still be president. in fact, 14 months from today -- like, how long can they keep this up? can you imagine? we're going to be doing this for 14 months. that's one thing that struck me. >> and it will be time for the midterm. >> second, how do republicans win without the hispanic vote? and third. what i don't understand, what i find most disappointing about trump is that he had the potential to be that kind of center right republican, business oriented, focused on growing the economy. and he's latched on to the most dark coffee grind, to mix metaphors, of the tea party, the immigration issue and driven it to this extreme. how do they win without hispanics in a national election? so it's really -- hey, i'm for a high wall. i want to protect our borders. i'm for a high wall with a really big gate, okay? because this country was built

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on immigration. i think where this thing is going is a really ugly place. >> will it be president rubio in 2016, do you think? >> i wouldn't even begin to hazard a guess. >> does donald trump have any chance at all? >> you know, it's hard to believe if he stays in this niche that he's in. does he branch out? i don't really know. thank god i don't do domestic politics. >> chuck, on the democrat side, on hillary clinton, what's the chance you think either al gore or john kerry or biden actually shows up to the table? >> look, the only realistic new candidate would be biden. and i've talked to plenty of people around him, and i think he's -- look, he's gotten a lot of encouragement over the last couple of weeks as he's made these calls. and so, you know, right now in august, i think he is leaning yes, let's see what happens when labor day rolls around. and he realizes that he can be -- he can probably raise the money to be competitive in iowa and new hampshire.

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but can he raise the money -- the only way to pull this off, this is not a -- it's not as if you beat hillary clinton in iowa and new hampshire she goes away. can he do this all the way until june? can he find the resources to do that? and i think that that's going to be the question he's got to answer satisfactorily and i don't know if he's answered that part of it. look, she certainly i think appears more vulnerable than ever. i think the fact that you have the three letters here that has made this e-mail story go to another level of seriousness is fbi. this is no longer she can't just say this is a partisan witch hunt by the house republicans. the fbi is now investigating regarding the classified info situation. and look, the best explanation still questions her initial judgment of why did she do this in the first place, and really was the only motivation to avoid freedom of information act requests. it feels as if that's the only reason she did this. so look, i think this is a

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problem for her ongoing. i don't know if it's a way to stop her from getting the nomination. >> chuck, i want to ask you, we had warren buffett on the program a couple weeks ago. he said look, it wouldn't surprise him to see this go to a brokered convention. if donald trump maintains some sort of support, doesn't see him dropping out lightly. i don't necessarily see that either. what do you think after spending time with donald? >> look, i don't know if it's brokered convention. i don't know if it's even donald as one of the finalists, donald trump as one of the findists. b -- finalists. but the way the calendar works, the way of our campaign funding rules, and the order of the primaries, the fact that many of the big state primaries are a little bit later in the cycle, i think it's inevitable that when the primary season is over, the leading republican candidate will have not clinched the nomination. does that mean we have a brokered convention? no. it could mean that there is some behind-the-scenes maneuvering. could it mean that the person with the most elegance at the end of this, but doesn't have a majority yet, is forced to have a running mate they don't want

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in order to lock in the convention? i think that scenario is more plausible than ever. i think it's very likely that it will be something like for history buffs out there 76 on the republican side, where we really didn't know, and you kind of knew ford was going to be the nominee, but there was a little fight at the convention. i think that's what we're headed for in cleveland. the party's too split and the money's too spread out. >> chuck todd, thank you so much. great to see you. we'll be talking with tom about winning the war with isis next. and at the top of the hour, target quarterly results are expected to hit the wires. "squawk box" will be right back. can a business have a mind?

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welcome back, everyone. let's turn back to our guest host this morning, tom friedman. tom, we've talked about a lot of things. we haven't talked on isis yet, but you did have a point you wanted to make from the conversation we started earlier in the middle east. >> yeah, basically, we really -- you know, going back to the original iraq war, we thought our choice there were between autocracy and order. we've gotten disorder at a very strange time in our history. in a post-imperial, post-colonial -- in other words, in a different era, the turks would have managed this program

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for us. in a different era, the british and french colonial power would have managed this. now you have disorder in a region where nobody wants to come in from the outside and impose order because all you win is a bill. that's what really worries me about this isis story. how will you produce order in this region? at a time also when it's being pulverized by a lot of other forces. to me, the biggest forces on the planet are the market, mother's nature, and moore's law, and they're all three in simultaneous acceleration. what that's doing is putting stress on big countries like ours, developed countries. and it's actually pulverizing weak countries. weak countries that were propped up by the cold war, and the cold war isn't there anymore. and which countries are being pulverized first and the most? they're the ones whose borders are almost all straight lines. the most artificial countries, libya, syria, iraq, the ones who were really just sort of drawn by a colonial power, and so i

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think the big challenge we have is in a post-colonial order, post-iraq order, who is going to bring order to these countries? >> mother nature, you argue. >> well, mother nature is pulverizing them. i wrote my column this morning about the fact that the heat index in a town in iran in the persian gulf hit 163 degrees two weeks ago. 115 degrees of temperature, and 90 degrees of humidity. i pointed out that the first cabinet meeting that iran's new president held was about the fact that the biggest lake in iran is drying up. this is a region that is just being hammered by mother nature. we just saw something no one's ever seen before. a body, the prime minister of iraq sacked all three of his vice presidents and the deputy prime minister. the government basically fell over air-conditioning. over the fact that they were not able to provide more than a few hours of electricity a day in a country where average temperatures were 120 degrees, and it's very interesting.

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they had a street protest, which we reported about where men dressed down to their skivvies, giant protests there by no party. it was all spontaneous. so trying to bring order out of this disorder is going to be a huge problem. and none of it is helped by the fact that we've spent a lot of time talking about iran and the threat of iran. there's something i really recoil at. it's this formulation. america, israel, and our saudi allies against iran. saudi arabia as a government was a staunch ally during the cold war. but saudi arabia's government is built on a bargain, which is the family gets to rule and they basically pay off the religious establishment to promote the most puritanical, anti-modern, anti-pluralistic, anti-shiite, anti-women ideology and they have changed the face of islam. if you think that isn't just as dangerous in its own way, what

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they have done to the face of islam, from london to the mosques in this country, then you're not paying attention. i really recoil at this notion that iran is the source of all evil in that part of the world. iran is a problem, okay? but just as big a problem, take a picture. go look at the graduating class of cairo university in 1950. you'll see men and women and nobody's wearing a veil. >> same with teheran. >> but look at the graduating picture of cairo university today. i guarantee you, more than half the women will be covered. and that is a gift of saudi arabia. it's a gift that keeps on giving. we have never called them on that. i think it's going to be a big problem in the future. >> are the iranian people actually pro-western? the people. >> only country in the middle east that had spontaneous candlelight support demonstrations after 9/11. it was in iran. because there's one thing the

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iranians don't blame us for, their own government. they know that, unlike these other governments, we didn't -- we're not propping that one up. >> tom, thank you so much for being here with us today. >> pleasure. >> it was great to see you, sir. good luck on the train. [ laughter ] when we return, we're looking for quarterly results from retailer target. the numbers and instant reaction when we come back. it's a fact. kind of like mute buttons equal danger. ...that sound good? not being on this phone call sounds good. it's not muted. was that you jason? it was geoffrey! it was jason. it could've been brenda.

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happening now, target reporting quarterly results. we've got the numbers, instant reaction and what is ahead for the sector. >> our neighbors to the north going broke. plunging oil prices putting pressure on canada. a report straight ahead. and message in a bubble. one company looking to kick its way into the already crowded messaging space. the co-founder of kick joins us as the final hour of "squawk box" begins right now. >> live from the most powerful city in the world, new york. this is "squawk box." welcome back to "squawk box" right here on cnbc. i'm here with becky quick and brian sullivan. we are less than 90 minutes away from the opening bell on wall street. take a look at the futures.

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we do look to open lower this morning. nasdaq looking to open about seven and a half points down. check out markets in europe overnight. here's what's going on. the dax off a little more than 1%. all of that keying off a little bit of what was a roller coaster ride in asia overnight. in the meantime, we have earnings. >> target just out with its numbers. it looks like the company is coming in with numbers well above expectations. profit of $1.22 a share that beats the street's expectations by 11 cents. street was only looking for $1.11. they are also raising their full-year guidance. they say they are looking for full year earnings of 4$4.60 to $4.75 a share. it's above the estimates at $4.62. taking a look at what they say, they say revenue was slightly above forecast for this quarter.

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sales did register a slightly better than expected increase. and maybe what's key with some of this, especially after what we heard from wal-mart yesterday, where they struggled on some of these issues. they say that comp sales in some of their signature categories like style, baby, kids and wellness grew three times faster than the company average. they saw sales of 4% to 5% in both home and apparel, which is good news for the retailer. you can see it's up by almost 4% this morning. this comes in contrast to what we heard from. with. while wal-mart said yesterday that they did see an increase in customer traffic and did see customer spending more, a lot of the earnings were below expectations guidance for the year because that company is doing some reinvesting to try and make sure it's bringing people in, particularly in the u.s. stores. joining us right now with some instant reaction is joe feldman. he is retail analyst at telsey advisory group. >> it's almost the opposite

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story. terrific sales results. earnings came in very strong. obvious brian cornell, the new ceo, he's been there about a year, has really been doing a terrific job and it's being reflected in the numbers. >> what do you think wal-mart is struggling with right now? is this a store or retail place that has been underinvested in for years? a lot of fixing to do there? >> i think that's really what it is. it's the underinvestment in the labor, in the stores. the whole i.t. systems they've been working on lately. but that's really their problem. sales are actually pretty decent. they came in pretty solid and it reflects the improving economy and the consumers hanging in there, especially after you see what target just did. but the investment spending really has needed to pick up for a while and they continue to find more sources of areas that they need to put money into. >> digital grew 30%, which is a big number. but it only accounts for .6 of 1% of overall same store sales. do we care about the so-called omni channel? >> i think the omni channel is really important for retail. you really need to have this

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full integrated brick-and-mortar with the digital and have whatever the customer wants, that's how you need to be able to offer the goods. >> target in particular has struggled over the last several years with home and apparel. that used to be their strong suit. something went wrong along the way. the fashion, the designing. something wasn't there. these numbers make it sound like maybe they're making pretty big strides in that area. >> i think they're refocusing on the core business and what they do best. they add some fashion to some discounted product and i think they lost their way. they're in the process of searching for a new head merchant. there's been some change at the top. you have to give credit to brian cornell for some of the impact. >> strategically in terms of going after clothing. one of the things we talk about all the time, people aren't buying clothes the same way. they may have their own fashion issues, but there's a larger fashion problem. >> right. absolutely. we're seeing that there's not really a hot fashion trend right now. dana telsey, she often talks

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about how there's a lack of new items. the denim trend we're hoping will start in, but right now it's all about athleisure. even think about back to school. how do kids dress for school in shorts, t-shirts. they're not dressing up in collared shorts or jeans and khakis the way we all used to. i think that's a big difference. so this whole athleisure trend is really here to stay. sneakers and technology is what kids want. and that's why i think we've seen this lack of apparel spending. >> what about financial engineering? the company saying it's bought back 65 million shares in the second quarter. 15 million year to date on a different program. so not to throw cold water on the results, but how much of the eps side of this is just a reduction in share count? >> well, it's certainly helping but that's what the investor wants. the investor has been looking forward to target being able to buy back more stock, pay a dividend and continue to reward them for being in the stock. so i think investors view that favorably these days and we're seeing frit a lot of others.

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whether it's home depot or lowe's or wal-mart, they're all buying back a lot of stock. i think that's how the investor has been buying these stocks. >> do you like target shares here? >> we do. >> they're trading at $83, just above that at this point, this morning, based on this news. >> i think you're going to see some price targets going up, our price target is currently 87 prior to this news. we continue to like it. i think there's still a lot more to come in the coming year, too. >> other retail stocks you like? >> really like home depot a lot. costco, tractor supply, kroger. all those big quality names. >> what do you not like? >> well, it's been tough -- i think some of the lower income players, like some of the lesser quality home furnishing names, for example, have not done as well. some of the dollar stores. i think dollar tree is going to have a tough time sbe gritting with family dollar.

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the specialty supermarkets like whole foods and the fresh market, i think they're saying share loss. i think that's an area you want to stay away from. >> thanks for coming in today. >> thank you. appreciate it. mortgage applications rose 3.5% last week, mostly in a jump in refinancing activity. refis hit their highest activity in three months because mortgage rates went down. on the economic agenda. the july cpi at 8:30 eastern time. we'll bring that to you as it breaks. and then the fed minutes at 2:00 eastern time. i'm told that's a reasonably fine program. and today marks 11 years since google went public in a dutch auction. since then, the stock is up more than 1,500% from its split adjusted price. some stocks to watch. they're on the move this morning. seagate technology buying dot hill systems, maker of data

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storage hardware and software. an 88% premium over the closing price. two retailers also out with earnings. lowe's exceeding estimates for both revenue and same store sales. office suppliers retailer staples matched estimates on both the top and bottom lines. the sales in the current quarter will fall from a year ago. coming up, education front and center today for the presidential candidates who are in new hampshire for a summit on the topic. campbell brown, co-founder of the seventy four will join us next. and take a look at what is the come later this hour. there you go. "squawk box" will be right back.

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welcome back to "squawk box" this morning. the futures right now are in the red pretty much across the board. hate to say that, but it's true. it's getting a little bit worse. s&p 500 off about six and a half points. weight watchers upgraded to equal weight from under weight of morgan stanley. this follows a 76% drop in the

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stock year to date, and the analysts also reiterating concerns that declining attendance at meetings is, he says, a permanent trend. hormel also raising its full-year forecast as its grocery products in greece and the company is able to successfully navigate the negative influence of avian flu on its jenny o turkey segment. we should tell you about lazy boy. the same store sales rising by 5.3%. check out shares of american eagle. we've been talking about clothing and fashion all morning. earnings and revenue topping estimate comps, rising by 11%. >> we just said fashion was down. nobody was buying clothes and everything was doomed. and now american eagle is up 11%. >> cargo shorts, right? >> cargo shorts? >> that is not what they're selling. >> what year are you in, my friend? >> cardigan sweaters are big for the fall.

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just went with the last girls. cardigan sweaters. jogger pants. >> remember when abercrombie & fitch was everything? >> so was is the story with teen retailers. >> you always put them in the same pile, but they performed in wildly different ways. can i make a proposal? >> yes, sir. >> if and when i'm ever invited to host the show, let's do the show in jorts. >> what are jorts? >> jean shorts. >> let's not do that. >> how about your parachute pants? bring those in. >> hit 'em, hammer. >> yeah. >> every story i do is a shark story. a shark and a seal had a close encounter off the coast of cape cod as the seal narrowly escaped getting caught. >> wait a second, drop the deck, rerack it. there we go. whoa. >> that's a cool video. the entire incident was somehow caught on camera by the atlantic white shark conservancy. i know everyone's cheering for

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the seal. but somewhere, there's a hungry shark. >> by the way, that's not too far from the cape cod beaches. bear that in mind. >> and hungry. still to come, inflation alert. we're going to read on the july price index in a couple minutes. education front and center for the presidential candidates who are in new hampshire for a summit on that product. sam bell bro campbell brown will join us next on "squawk box." seal lovers, apparently. ♪ i built my business with passion. but i keep it growing by making every dollar count.

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welcome back to "squawk box." the education front and center on the campaign trail in new hampshire, with several gop candidates speaking at an education summit starting in just a couple minutes. participants include governor jeb bush, chris christie, bobby jindal. mr. kasich is here. he's not with us, but he's with them. scott walker, and carly fiorina. it's hosted by a news site called the seventy four, and the co-founder and editor-in-chief campbell brown joins us this morning. hi, how are you? >> hey, guys, good to see you. >> so tell us about what's going to happen today. what is the single biggest issue

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you plan to raise with these folks? >> education. >> but what about it? >> we've got a lot of ground to cover today. so here's what i think is interesting. you guys get to do this because you're more narrowly focused on the issues you cover in your job. but in all of my years as a political reporter, i literally never sat down with a candidate and was able to go really deep on a single issue. so this is 45 minutes one-on-one with each of these candidates on education policy, and it will range from, you know, how they shift roles from being governors -- because almost everybody here today is a governor, except for carly fiorina. but shift roles from being a governor, where much of education policy is done at the state level, to then being president of the united states. and now you're responsible for all of this country's 74 million kids. and do the policies, expanding choice. do those work at the federal level? and how do you hold states accountable and try to up our game, because we know the economy is going through this transition.

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we are leaving a generation of kids behind if we don't up our game. so it's a critical issue. and because, a, we have so many governors running, they really do know this stuff. you know, jeb bush has been working on this for years. plus you have this debate about common core on the republican side. there's a lot of really rich material here. so i think it's going to be a really good conversation. >> campbell, draw some lines around some of these candidates. i mean, don't front run the interviews for today. but tell us in terms of big distinctions between the candidate on these issues, i assume just about everybody that you're going to be interviewing today is for charter schools. there is a debate over common core. but after that, and you get down in the weeds, what do you see? >> so, honestly, i think one of the more interesting things is going to be finding out who really knows this stuff. and who's thought about it. because you can't do a 45-minute interview or conversation and just do talking points, or, you know, base that on some briefing a staffer gave you. you have to have been pretty

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thoughtful about this. again, because they're governors, every one of them has had some sort of fight at the state level around education. so they do have real life examples of what works, what doesn't work. and experiences they have had. common core is going to be interesting, though. you have jeb bush and john kasich, who are really the last two to defend, you know, a common set of national standards. it's become a huge issue on the republican side, and i guess my question for all of them on this is, you know, they all say we all want high standards. well, how do you know that standards are high if every single state has a different standard? and, you know, for somebody like carly fiorina who's been a ceo, who understands what our work force needs to look like going forward, you know, how do we ensure that, you know, some of the states that have lagged behind don't stay there and are able to catch up. and that's really what we're trying to get at today. >> did you invite the donald? >> did i invite the donald? of course.

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we invited all of the candidates. yes. we invited all of the candidates. he couldn't commit because he had jury duty and they didn't know how long it was beginning to go. he did get released. we reissued the invitation and we never heard back from them. i'll tell you, andrew, i don't know if he could go 45 minutes on a real policy question. i'm not sure he could. if i were advising him, i don't know if i would tell him to participate in this. when i've seen interviews that have actually been on policy issues, he doesn't really have a lot of places to go. so it's probably for the best, although it might have been entertaining. >> i think you issued him a challenge, by the way. it's brian sullivan. good to chat with you again on this important topic. not just improving curriculum. and i haven't heard any politicians talk about it. and if i have, i've missed it. talk about keeping kids in school. 7,000 kids drop out of high school every day, pretty much

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dooming their economic future. how do we fix that problem? >> well, and that to me is the other big thing we're going to talk about. which i believe that that has a lot to do with our -- you know, how we fail to innovate what the classroom of the future looks like. the technology has changed our lives in so many ways over the last century, yet we're still teaching our kids the exact same way that our grandparents learned. it's absurd. and so for kids who are struggling and who are at risk of dropping out, we are unable to individualize their learning plans, and use technology that would allow us to do that. where they could go at their own pace and not be completely left behind. and where we would enable teachers by giving them more time and flexibility to spend more time with those kids. so that's a question i want everybody to answer and see to the degree to which they thought about this. what does innovation mean in education, and what does the

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classroom of the future look like? how do we allow these technologies -- how do we disrupt public education in the way that's happened in every other aspect of our lives so that these kind of technologies can get into the classroom more quickly? >> campbell, we talked about economics and business on this network all the time. student debt a huge, huge issue. how much of that is going to be part of the conversation, and do you think anybody's going to throw down the gauntlet when it comes to hillary clinton's plan to push $350 billion into the business to effectively kill college debt? >> so we -- i'll just be honest. we are focusing on k through 12, because to me, that conversation is another 45 minutes. now, i will say this about k through 12. i mean, a big part of the problem, if you just look at the statistics, about 75% of the kids who enter college are not prepared for college. and then they're forced to take remedial classes, which means they graduate much later and that adds to the student debt.

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i will say this. there's a reason hillary clinton is focusing on that. she has not talked about k through 12 education at all since she became a candidate. she did manage to get the teachers unions endorsement, the aft, without talking about it. but, you know, it's a dangerous issue for her, because it does mean if you sort of lay out some challenges, that you're potentially taking on the union, and for a democrat, that's a lot harder, so it's a safer place for her to talk about, you know, college, to talk about early childhood, than it is to get into k through 12. so i think you'll see democrats sort of trying to avoid it. >> are you laying down another challenge? are you going to sit down with hillary? >> well, so that's what i was going to say. we are planning a similar summit with the democrats in iowa in october. and i hope that she'll join us. you know, she has a lot of interview requests at this particular moment. so i'm in the line with everybody else, i guess. but, you know, i think this has the potential to be a huge issue

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in this campaign and i hope they'll talk about it. >> okay. campbell, we appreciate it. good luck today. we look forward to hearing the results of this conversation. >> thank you. >> you bet. when we come back this morning, inflation data that could move the markets. the july consumer price index is straight ahead. and then market pro david blitzer of s&p is our special guest. right now, though, as we head to a break, take a look at the u.s. equity futures. they've been under a little bit of pressure all morning long. right now, the dow futures down by about 6 1 points below fair value. the nasdaq down by seven.

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welcome back to "squawk box." here's what's making headlines. shares of target. the retailer beat estimates on both the top and bottom lines. comparable store sales rose more than expected. it's also raising its four-year forecast. also the latest greek bailout winning some key support as germany's parliament is voting in favor of backing the aid package. that vote, 454 in favor, 111

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against. american express is adding a cash-back feature to its prepaid debit card. trying to expand beyond its primary customers. got to watch that stuff as well. wells fargo is adding branches focused on car loans and financing for auto dealers. the bank's head of car lending says that that firm is trying to increase lending without taking on bad credit risk. the new york fed reports consumers have $1 trillion of automobile loans outstanding, that is up from about 700 billion in the first quarter of 2010. we are just a few seconds, about 50 or so, 40 or so, from the july cpi. we've got rick santelli standing by at the cme to talk cpi. we're a little bit early here, so give us your take on what the main issues of the day going to be for you outside of the cpi? >> well, great op-ed. in "the wall street journal" saying why we should not raise interest rates. boy, i'm glad big fortune 500

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boards don't act like our fed officials. you have one pointing north, one pointing south, one pointing east, one pointing west. is that any way to run a central bank? if you really read that article, i think it's very enlightening as we get ready to look at cpi. year over year range for this year so far has been 1.6 to 1.8. and the survey is out, up .1 on headline. when you strip out the all important food and energy. if you look at cpi year over year, up .2. if you look at the core year over year, up 1.8. it is as if you xeroxed a copy of expectations basically and they came out close. one could argue that the .1, maybe it is, or maybe it isn't, depending on the surveys. definitely the year over year data is spot-on and exactly as we're expecting. the .2 year over year is .1 hotter than our last look.

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so i don't know if this data meanings much. so this ends up being one, two, three. the fourth year over year quarter that we've had. you have to go all the way back -- let's see here. you have to go all the way back a year to july of last year to find a higher number, which was 1.9. you go all the way back to may of last year to find a 2.0. let me think. why is that important? it's because where we settled last year, the 31st of december, 2014. tens were at 217. 30s were 275. they're currently at 284. that last metric is what traders have been watching. foreign exchange, dollars add some volatility, but, you know, we've been lacking more at the trade weighted dollar index. this data really didn't move any of the markets in terms of yield. close to expectations, and actually, one bright spot here i want to point out. it just flashed late. real average earnings, year over year were up 2.2, that's versus

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our last look at 1.8. that is a bit of good news imbedded in this. back the you, brian and of course andrew ross sorkin. >> thank you, sir. >> hey, what about me? >> and becky. >> oh, and becky! of course. i am sorry, becky. hard to keep track of who's in and who isn't in. >> i know, it's august, we're all over the place. >> in the meantime, let's bring in our other friend, steve liesman, he's been looking at these numbers. what was your comment about rick? >> the wages. >> you had an under the breath comment about his comment. >> if it was under the breath, perhaps it was under the breath for a reason. >> let me bail you out. the 2.2% wage jump -- >> i said that's good news. >> it wasn't a nasty comment. >> no. it was on the merits. it was an issue oriented comment. >> i think what i said was that it was indeed light. he said you can debate whether or not it's light. the reason i would bring it up as actually being light is

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because -- where do you want to it it. on the razor's edge of the rate hike of whether or not they're going to do it in september or not. every tenth i think does indeed matter. so he's absolutely right to focus. we've been stuck at 1.8 year over year on the core cpi for now four months running. and you just don't get a lot of information. we were hoping for something. it's like, do one thing or the other. go up for the love of god or come on down, but don't stay right there, because right there is indecisive and doesn't help us. we did get -- i think it was brian who mentioned this earlier. the fed president from minneapolis was certainly the longest name, the most interesting name, the hardest name to pronounce. i've got it down very well. here's what he said. he said monetary policy itself poses the biggest danger to the u.s. economy. he is a -- i know it's mixing a metaphor -- he's hardcore when it comes to wanting the fed to do additional quantitative

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easing because he says inflation is not hitting the target. he's really worried that by taking action to raise rates, what the fed is going to do is cement in the minds of the markets and in the public an idea that they really are going for a lower inflation target. >> although the other -- look, i think that's crazy to think that the general population even thinks about inflation targets. i mean, i think that's a bit of a stretch. but what about the idea that if we head into another recession, even if it's a year, two years, three years down the road, you're not going to have a lot of ammunition to fight it. >> so the answer to that by the doves is don't create the next recession by making ammunition for fighting the next recession. >>. >> but becky, here's where gundlach is important, for his sense of what the single quarter point means.

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i'm driving in listening to becky. you said gundlach said it would start a series of rate hikes. the fed has not succeeded in communicating this notion that it's just a quarter. and the trouble has been all along if they do the quarter, the market price is in more and longer. and the normalization process. that's why i have maintained that the third criteria for the fed hiking rates is this notion of whether or not the economy can withstand normalization. >> there's only three things i'm certain of in life. number one is i'm going to die. number two is the chargers are going to win the super bowl. number three, is the fed is going to raise rates. >> but you don't know the timing of two of those three, so it's meaningless. >> david blitzer is here, he's the chairman. >> i thought you were just getting into it. >> thought i was going to help. >> david blitzer, chairman of the index committee. good morning.

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good to see you. >> good morning. >> and welcome to crossfire talk. >> more exciting that way. go ahead. >> my point i was trying to make is why do we fear the fed? in 1994, the federal reserve jacked up rates aggressively. in 1995, all the dow jones industrial average did is gain 33%. its second biggest gain in 40 years. >> let's go back to 1994 for a moment. i remember that very well. virtually everybody had this cute term of it will go up a quarter point per quarter. it sounded cute. it was a good tag line. every economist, certainly in wall street, if not the country used that line. what happened? every a quarter, we're up by 200 or 300 basis points, not a lousy 25. and it was a massive shock. and then you had everybody looking at ten-year treasuries.

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as they shorted that, the ten-year treasury went against them and it was a cycle that killed people. so that's why they got scared. this time, i've yet to find anybody who thinks if they raise in september they can do it again this year. most people are talk about first or second quarter next year. i don't think this fear is built in, and so on. if it were, i would agree they shouldn't do it. but i don't think it's built in. >> you don't? but everybody knows the fed is going to raise at some point. >> first time. but the second time is the damage. quarter point, you know, unless you're in the trading room, you're not going to see it. and i don't think people are going to read it into inflation and so on. they read into inflation the thing ths they buy every day go up. the price of a cup of coffee at

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starbucks goes up 25 cents, everybody will be convinced there's inflation. and that kind of thing. that's where the general consensus to the concept comes from. but i think the fed really wants to get a quarter point under its belt. they want to try and creep back for a normal operating arrangement. and get a little comfort in how they manage the economy. they're in a new world with the kind of operating arrangement. >> let me just point out here that st. louis fed president bullard has said he will argue for september liftoff at the next meeting, and i believe the next meeting is september. >> yeah. >> and he's saying just based on the data today out, i would argue the september meeting for making an initial move that would be modest and small. i'll try to do my best to argue for it, assuming incoming data support it. that is in an interview with market news international. and i think that that's -- it's hard to peg down yellen and where she stands on this right

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now. i think she has had some language that suggests to me she wants to raise, when she used that phrasing in the congressional testimony where she pointed out that the economy -- if the forecast comes as they expect, not only needs it, but could tolerate a rate hike, made me think she's sort of basically there when it comes to raising rates. >> so she's more bullardian that kocherlakota-ish? >> certainly kocherlakota is out there on his alone in terms of argument for more easing. m maybe charlie evans agrees with him. i think the center of the board would probably go for a quarter point rate hike in september. >> i think he's sort of -- we tell them to go off and do whatever they want to do. >> right. >> and in any sort of policy group, you know, there's one guy at each extreme. you all listen politely and then you sort of ignore it.

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>> one guy, probably a woman arguing for a rate hike several months ago. esther george. there's the two extremes out there. and then you have the center of the board. i think the governors will follow the chair when it comes to these things. that's why i'm listening to the guys like lockhart and bullard. >> you said 60% chance. have you raised that? >> no, i'm right in there, becky. i know that's a little wimpy. i'd like to be able to say 80 or 20 is a more bold call, but the data has to come in. it's that close a call i think right now. i think the fed wants to be very careful. the error they want to make is on being more dovish, rather than less dovish. they think -- you know, when you talk about about '94, the feds are looking at 37. they're looking at tokyo. >> but why can't we focus more on the wage inflation number, which is good. >> that's not a wage inflation number. get rid of that word, that phrase. >> but i meant it in a good way. >> but it's used in a bad way. >> i didn't use it in a bad way.

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>> wages going up are a good thing. thank you, david. real wages. >> there's pricing power in the labor market, which means that that's good. >> 2% real is not that big a deal. >> the data is not in. you get another employment report, the inflation rate is not the cpi. so sorry, got to wait. >> all right, gentlemen, thank you both. >> hurry up and wait. up next, kicking it with kick. the popular messaging service has over 200 million users. they're looking to grow their base by targeting teens. the company's co-founder talks business and the messaging bubble, next. "squawk box" will be right back. . well, we have 30 years of customer records. our cloud can keep them safe and accessible anywhere. my drivers don't have time to fill out forms. tablets. keep it all digital. we're looking to double our deliveries. our fleet apps will find the fastest route. oh, and your boysenberry apple scones smell about done. ahh, you're good. i like to bake. add new business services with at&t and get up to $500 in total savings.

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welcome back, everybody. a canadian company is securing a patent for a 12-mile-high space elevator. it seems like something straight out of "the jetsons" or weirder. the company tells cnbc that the elevator could transport ten tons of cargo at approximately seven miles an hour, with apparentlies able to reach the top tower in about 60 minutes. a person could then board a space plane, in near ritheory, r orbit without a space launch. how it holds up against wind, how you're not running into it, that's the other issue. they did secure a patent for it. >> i like the idea. >> i don't know how you get a

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toilet to work at that height. >> it could work. we're going to talk about technology. tencent investing $50 million in mobile messaging app kick, which has significant engagement among young consumers, but with so many messaging options available, is there a bubble in the messaging market? chris bess is the co-founder. for us old fogies that don't really understand the whole messaging phenomenon beyond texting maybe, we're not even into emojis. >> you've got to get on that. >> don't say we don't understand. i get it, i just don't have a place for it. >> just explain what kik is, and b, how it's different than all the other messaging apps out there right now. >> so kik is a chat app. chat is the most important thing you do on your phone. we used to think phones were going to be a device for making phone calls. we know that's not true. it's for texting.

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kik is one of many apps that let you text, but it's also more than that. it's also a platform. so not only can you text people and this have great communication with your friends, you can also text with places, things, businesses, becoming a chat platform, much like we chat has in china to resoundin ing success. >> and you're doing that in the u.s. >> yeah, particularly for young people in the u.s. who are our main demographic. >> the numbers are kind of staggering. i've read 200 million. i've read 240 million. how many people have downloaded this app? >> over 240 million registered users, but much more important to me is over 40% of young people in the u.s. use kik actively. >> wait a second. how many people, if you have 240 million who have actually downloaded, how many do you have on a monthly basis who come in? how many active users? >> we don't show the monthly active number. >> but the 240 million number i think is total garbage. people who don't necessarily use it all the time. i'm much more interested in hearing how many people are using it constantly. when you say 40% of young

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people, what does that mean? >> if you look at the u.s. census data of how many people ages 13 to 19 in the u.s., 40% of those are active on kik. >> on a monthly basis? >> yes. >> how do you make money? >> we're building this ecosystem on top of chat, so it's hard to monetize just a messenger. you don't want to cram it with ads, you can't sell it. but when you build stuff on top of messenger, there's a huge potential there to make money on top of the businesses that build through chat. >> explain what that means. >> on we chat in china, you can talk to your friends. you can also order a taxi. you can also buy things online. you can also refinance your mortgage. so they've built this platform where because chat is this natural way to communicate in mobile, they've built it as the gateway to all of the real world businesses you want to interact with, and there's just a tremendous amount of money there both in charging for the service, in promotion, directing

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traffic, all of that stuff. what google was to the age of desk top internet chat is to the age of the mobile internet. and we're seeing that in china. >> how are you different in terms of the customer base that you have versus snapchat? are kids using both? >> we have a very similar demographic. i think snapchat is doing something quite different than kick. they started off in chat. they're doing more and more of a broadcast platform whether than a message where you have a real conversation. i think they can coexist. >> is it literally my daughter's phone is beginning to have all of them on there and she'll have friends on all and you guys can all prosper? or do you have to knock somebody out to win? >> i think that's especially true with snapchat and kick. you can have both. i do think that in the platform -- in the race to become the dominant chat platform, there may be a winner take all, at least locally.

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and that's what we've seen with we chat in china. like, we chat dominated text messaging in china and they leveraged that into becoming this platform that's going to be almost impossible to uproot in that geography. >> all right. okay. chris, thank you. you're a unicorn. are you officially a unicorn? >> we're in the unicorn club. >> when you reach leprechaun status, let us know. still to come, jim cramer and what he thinks is going to move the market this hour. he'll join us after the break. we are indicated for a down open. actually, losing a little steam. we'll get jim's take. stick around. >> you're watching "squawk box" on cnbc, first in business worldwide. but how can you spot who's at risk? the one who lives far from campus? the one who works the night shift? the one with new responsibilities?

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welcome back. as college kids head back to campus, we're getting a snapshot this morning of college students. get this. most members of the class of 2019 were born in 1997. for this group, google has always existed. e-mail is considered formal consideration. color photos have always been on

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the front page of the new york times. the lion king has always been on broadway. the freshman haver in licked a stomp. and princess dianna and mother theresa were never alive in their lifetime, and notorious big. >> we're going to party, my initials. >> your initials. interesting. >> let's get down to the new york stock exchange. jim cramer joins us now. yesterday we heard from home depot and walmart. we knew the home business was doing well. today it was lows in target a it's a reversel of fortunes. >> i'm wondering if target is winning in many of the categories that walmart is weak. walmart has become a source of traffic -- buying traffic for

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target. target is back, and that's important. it's back in wellness and apparel and sportswear, and this is not back to school which is an important season for them and do not forget the pharmacy problem that walmart has. that's going away for target. this is all within the confines in the only area of the market that's working. we have to work that what analog devices said today, it said in the conference call it's going to make it so apple does better so it moves technology. otherwise the setup is up again engetting a drag. >> lowes having a tougher time than home depot. is that a case of beating our kpet competitor. >> home depot, tjx was good but not as many detail. home depot, all aisles were strong. what shocked me about home depot is there's spring planting

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season. didn't even go well because of weather in texas and california, and, yet, they still blew away those numbers. can you imagine that part did not do well? that's a huge part of their real estate. they had an outstanding quarter. lowes isn't bad. do they deserve to be up as much as home depot? no, but this is home, and home is doing well. >> thank you and we'll see you in a few minutes. >> all right. coming up, we're going to head to the great white north, the price of beer is now the same as a barrel of oil. a slow down in investment could hurt housing in canada. the story continues when we come back on "squawk box."

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♪ the answer is yes, it can. so, the question your customers are really asking is, can your business deliver?

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>> canada is on the verge of recession. a develop drop off in investment from china and the big drop in oil prices. we have more from vancouver. >> canada is certainly hurting. our problems now extend further than alberta and the energy sector. our housing market, currency, all very much tied to

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commodities in the price of oil. because of that we are just one gdp read from a technical recession, but we went across the country and spoke to people on the street and found that a recession is a foregone conclusion for a lot of folks out there. have a listen. >> it's showing all the signs of a recession, certainly western canada. >> it's like we're probably headed that way if we're not already in a little bit of a recession. >> we're on the verge of road y recession or possibly we've dipped into one. >> reporter: if that view is wid spread, it could be a dangerous thing for the canadian economy. a lot of the people we spoke to said they were already scaling back on purchases. the widespread view of a recession could chill the consumer and business spending. the pain is being felt most in the oil sector. analysts say it's worsened over

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the last few weeks. the price of canadian crude, the benchmark fell earlier this week to below 30 canadian dollars a barrel. i can confirm that oil is now cheeper than beer. yesterday i went out and bought this ka nad dan canadian -- >> we lost her. make sure you join us tomorrow. "squawk on the street" begins right now. >> good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer. busy session already in place as the retail earnings continue to pour in. premarket is a littling soe sog. the benchmarks right around 220.